Prospective first-time buyers would have lower monthly outgoings if they bought a property than they do renting, according to new research from Santander Mortgages.
In every region of the UK, average monthly rental prices now surpass those for the average mortgage repayment.
According to the bank’s research, would-be buyers could save themselves £2,300 a year if they were able to purchase their own property. The average monthly rent in the UK is currently £995 per household compared to monthly repayments of £805 for the average first-time buyer household, meaning homeowners could save an average of £190 a month or £2,300 a year.
Potential first-time buyers in the South West are set to make the biggest monthly savings by making the switch from renting to property ownership as average monthly rents exceed mortgage payments by over £192. First-time buyers in London, where rental prices are 56% higher than the UK average, would see themselves £179 better off per month.
At the other end of the scale are those living in the East of England, where typical first-time buyer monthly mortgage payments exceed average rents by only £2.
| UK Region | Average house price | Average rent per month | Average monthly mortgage bill with 21% deposit | Difference between rents and mortgages |
| South West | £ 187,416 | £902 | £710 | £192 |
| Greater London | £ 363,555 | £1,555 | £1,376 | £179 |
| Scotland | £ 137,504 | £678 | £521 | £157 |
| Wales | £ 129,582 | £618 | £491 | £127 |
| North West | £ 137,874 | £643 | £522 | £121 |
| Yorks & Humber | £ 136,834 | £631 | £518 | £113 |
| West Mids | £ 151,224 | £674 | £572 | £102 |
| East Mids | £ 144,712 | £636 | £548 | £88 |
| North East | £ 121,072 | £541 | £458 | £83 |
| South East | £ 246,023 | £959 | £931 | £28 |
| East | £ 215,082 | £816 | £814 | £2 |
| UK | £ 212,610 | £995 | £805 | £190 |
Source: Santander Mortgages, 2015
Miguel Sard, managing director of mortgages at Santander UK, said: “People assume that buying a property will put them under greater financial pressure, but often the reverse is true. With annual savings averaging well over £2,000, this can really mount up over time and of course once the mortgage is paid off you have a valuable asset to show for it.
“Many prospective first-time buyers see the cost of saving for a deposit as prohibitive, but there are many deals available for smaller deposits. Buying a property is a big financial commitment and there are upfront costs to consider, but over the long-term the financial benefits can be very significant.
“Getting independent advice and looking for competitive rates either online or through a mortgage advisor is crucial to get the best mortgage to meet potential homeowners individual needs.”
The research found the average price across the country to be £212,610. This means that a buyer with a 21% deposit – the average deposit size for a UK first-time buyer – would require £44,648 in order to get on to the property ladder.
